Market News

Finance ministers from the Euro Zone will be meeting later today to discuss with Jean-Claude Juncker, the Eurogroup chairman, their concerns about the Euro-zone’s recovery, given the single currency Euro’s recent continued rise.

The USD declined to a low of several months vs commodity-based currencies and the EUR, as comments by policymakers confirmed the opinions that the U.S. interest rates would remain lower for a more extended period of time than those belonging to other large countries. The greenback hit a low of 14-month vs. the EUR as well as the higher-yielding AUD.

Recent comments by U.S. policymakers reinforced investor belief that key interest rates in the United States will remain at historic lows, even while other countries around the globe are hiking their key rates as the recession ends.

The EUR reached a 14-month high vs the USD in Asia Wednesday as a result of the broad greenback weakness. This weakness was a result of growing expectations that the Federal Reserve is going to keep interest rates low for at least the upcoming year.

Continuing investor doubts about the direction of interest rates in the United States has whetted investor appetite for higher risk currencies and caused the U.S. Dollar Index to fall to a new 14-month low in Asian trading today.

The U.S. Dollar continues to struggle to make headway against other major currencies while market players take a wait-and-see stance ahead of the release of economic data from the U.S. and Germany.

With investors covering their short positions versus the Yen, the U.S. Dollar edged up slightly in Asian trading today, continuing the gains made late last week.

As reported at 11:19 a.m. (GMT) in London, the U.S. Dollar continued to weaken in Thursday trading following better than expected jobs data from Australia, which helped to prop up the AUD.

The U.S. Dollar continues to be on the defensive in Asian trading today, following the rumor of a report suggesting that several oil-producing countries within the Gulf States are pushing for currency diversification away from the U.S. currency.

As widely anticipated by many analysts and investors, Australia’s Reserve Bank raised a key interest rate by 25 bp to 3.25% today. Thus the RBA becomes the first central bank within the G20 to acknowledge the easing of the global fiscal crisis. As a result, the Australian Dollar rallied to $0.8876 versus the U.S. Dollar, a 14-month high. Also profiting from the RBA’s decision, the New Zealand Dollar rose to $0.7357, also a 14-month peak. An FX distribution manager in Tokyo suggested that while there may be some profit-taking in the next few days, over the longer term, the Australian Dollar will continue to gain.

Disappointing jobs data released by the U.S. Labor Department last Friday precipitated the U.S. Dollars continuing decline versus major currencies.

Before the expected release later today of non-farms payroll data from the United States Labor Department, the U.S. currency traded flat versus a group of six major currencies.

The U.S. Dollar moved up versus the Japanese Yen in Asian trading today as institutional investors sought to fund their overseas investments through the purchase of the greenback.

The Australian Dollar hit a 13-month high versus the U.S. Dollar as better than expected retail sales data from Australia provided mounting evidence that an interest rate increase could be forthcoming before year end. Speculators believe that, as early as November, the Reserve Bank of Australia will likely move to increase key interest rates.